Deeping investment cooperation, promoting industrial transformation between China and Caribbean countries as presented by Dr. Wu Qijin, Chief Executive Officer, China-LAC Cooperation Fund on July 10, 2017 at a conference titled, 'Chinese Renminbi in the Caribbean-Opportunities for Trade, Aid and Investment,' held at the Hilton Barbados Resort.

1. 中拉合作基金
C h i n a - L A C C o o p e r a t i o n F u n d

2. 目录
CONTENT
中拉合作基金
CLACFUND
China-CELAC Cooperation
Plan 2015-2019 and the second
policy paper
01
Investment cooperation between
LAC and China
02
03 Potential using scenario of
RMB in LAC and its effect
04 Recommendations

3. China-CELAC Cooperation Plan 2015-2019
and a second policy paper

4. 1.1 Backgroud
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Consensus
The China-CELAC forum has yielded delightful early
results, which has laid a solid basis for the long-term
development of the all-round cooperation between
China and Latin America and Caribbean States.
The cooperation aims for win-win results and shared
prosperity.
On Jan 8-9 2015, the first ministerial meeting of the
forum of China and the Community of Latin
American and Caribbean States (CELAC) was
held in Beijing, marking the start of a new era that
features all-round cooperation between the two sides.
At the meeting, China and CELAC agreed on three
major documents :
1. A five-year cooperation plan;
2. The Beijing Declaration and;
3. The Regulations on China-CELAC forum.

5. 1.2 China-CELAC Cooperation Plan 2015-2019
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Bilateral ties have been further boosted by the
China-CELAC Cooperation Plan (2015-2019).
The Plan sets out 13 thematic areas of work, 8 of
which are in economic spheres, and 6 among them
are closely related to our today’s topic:
 Trade, Investment and Finance (III),
 Infrastructure and Transportation (IV),
 Energy and Natural Resources (V),
 Agriculture (VI),
 Industry, Science and Technology (VII),
 Tourism (XI) .
The plan, highlighting inclusive growth,
sustainable development, reduction of social
inequality and diversification of production,
called on China to increase investment in the
region to $250 billion over the next decade.
Both sides will also strive to achieve a trade
volume of 500 billion US dollars .

6. 1.3 A second policy paper on Latin America and
the Caribbean
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On Dec 25, 2016, at the end of President Xi’s successful
state visit to Ecuador, Peru and Chile, Chinese
government released its second policy paper on Latin
America and the Caribbean providing guidance for new
ideas, proposals and initiatives in policy.
Released at a sensitive time when world politics and the
global economy are undergoing profound changes, it
shows China's promise to develop relations with Latin
American and Caribbean countries
In the last five years, President Xi Jinping, Chinese top
leader, has launched 3 times state visits, which fully
demonstrates that the Chinese government attaches great
importance to developing strategic relations with Latin
America and the Caribbean countries.
The document, based on experience from past
cooperation, focuses on solving problems and
obstacles in current relationships and indicated the
direction for future development.

7. Investment cooperation between
LAC and China

8. 2.1 China’s macroeconomic stature as of 2016
The economy has registered a slower but stable performance with good
momentum for growth as of 2016; GDP reached 74.4 trillion yuan, representing 6.7-
percent growth, and seeing China outpace most other economies. China contributed
more than 30 percent of global growth;
Continued advances were made in reform and opening up. Initial success was
achieved in supply-side structural reform; rapid progress was made in pursuing the
Belt and Road Initiative;
Economic structural adjustment was stepped up. Consumption was the main
driver of economic growth. The value created by the service sector rose to 51.6
percent of GDP. High-tech industries and equipment manufacturing grew rapidly
New drivers of growth gained strength. Further progress was made in pursuing
the innovation-driven development strategy, and a number of world-leading
achievements were made in science and technology. Emerging industries were
thriving, and the transformation and upgrading of traditional industries accelerated.
Infrastructure became ever-better able to sustain development. Over 1,900 kilometers of
new high-speed rail lines came into service, and more than 6,700 kilometers of
expressways and 290,000 kilometers of rural roads were built or upgraded.

9. 2.2 Impact of China’s growth on the global economy
The global economy is showing signs of
moving in the right direction. The
related international organizations
forecast that it will grow by 3.5 percent
this year, the best performance that we
have seen in several years. This would
not be possible without the efforts of the
G20 and the rest of the world. On the
other hand, the global economy is still
plagued by deep-seated problems and
faces many uncertainties and
destabilizing factors.
low-cost
manufacturing
Industriris
&
clustering
Huge
demand
------ Quoted from the Statement on the
State of the Global Economy by
President Xi Jinping, At the G20
Hamburg Summit Hamburg, 7 July
2017

10. 2.3 China’s role-2
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According to SWIFT statistics, the RMB ranked 3rd, 5th and
5th for the trade, financing, payments and foreign exchange
trading respectively at the end 2016.
The volume of RMB settlement in cross-border trade and
direct investment continued to increase.
International cooperation regarding RMB internationalization
has gained remarkable achievements. By the end of 2015,
33 overseas central banks or monetary authorities had
signed the bilateral local currency swap agreements with the
People’s Bank of China (PBC). The total size of the
agreements has reached approximately RMB 3.31 trillion
yuan. Overseas RMB clearing arrangements were
established in 20 countries and regions.

11. 2.4 FDI flowed from China to Latin America and the
Caribbean (1990-2013)
Until 2010, very little foreign direct
investment (FDI) flowed from
China to Latin America and the
Caribbean. It has increased
significantly since then. ECLAC
estimated that in the two decades
prior to 2010, the region’s inward
FDI from China was about US$ 7
billion in total. A turning point was
reached in 2010, when the inflow
of FDI from China approached an
estimated US$ 14 billion —
equivalent to 11% of the region’s
total inward FDI.
Source: Economic Commission for Latin America
and the Caribbean (ECLAC), Latin America and the
Caribbean and China Towards a new era in
economic cooperation,2015
Note: Official data on Chinese FDI in Latin America and the Caribbean do not reflect the real scope of these investments
because Chinese companies usually channel most of their investments through third countries.

12. According to the statistics of the ministry of commerce of China, in
2015 and 2016 ,China’s non-financial direct investment to Latin
America and the Caribbean reached to $21.4 billion and $29.8
billion respectively, representing 67% and 39% annual rate of
growth.
While the new civil engineering contract between China and Latin
America and the Caribbean countries, valued $18.1 billion and
$19.1 billion respectively, representing 10.3% and 10.3% annual
rate of growth.
2.5 FDI flowed from China to Latin America and the
Caribbean (2015-2016)
In January 2015, the CELAC member countries and China agreed
to aim for a mutual investment stock target of at least US$ 250
billion by 2025, which means a average +25% annual growth rate
should be maintained during the coming decade.
We believe the Belt and Road Initiative and related reforms under
way in China could give a strong boost to FDI flows into Latin
America and the Caribbean in the next few years and make the
goal be realized. 中拉合作基金
C h i n a - L A C C o o p e r a t i o n F u n d

13. 2.6 FDI net inflows in Latin America and the Caribbean
Source: World Bank Data
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14. Potential using scenario of RMB in
LAC and its effect

15. 3.1 Potential using scenario of RMB in LAC
I. Cross-border RMB settlement
II. The RMB as a Reserve Currency
III. RMB-denominated International Bonds
IV. Domestic RMB Financial Assets Held by Non-residents
V. RMB Foreign Exchange Transactions
VI. The Offshore Use of RMB Banknotes
VII. Bilateral Local Currency Swap
VIII. Overseas RMB Clearing Arrangement
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16. Recommendations

17. Latin America and the Middle East provide compelling support for the middle-income
trap hypothesis: in these two regions, most economies reached middle-income status
as early as the 1960s and 1970s and have remained there ever since (see figure
BO.1.1a)

18. Diversifying exports and greater trade balance
equilibrium, to save more foreign currency
including RMB.
Increasing and diversifying Chinese
investment in the region, especially the RMB
cross-border investment
Establish more efficient systems for granting
visas to Chinese citizens to boost the tourism
and facilitate foreign investment.
Capacity building. A Regional Centre or
platform for promoting and facilitating Trade
and Investment in RMB is in need.
Recommendations

19. 04
Established Background of CLACFund
In July 2014, President Xi Jinping
announced a commitment of $5 billion
to form China-LAC Cooperation Fund. In
April 2015, the State Council decided to
increase the size of the fund to $10
billion. China-LAC Cooperation Fund
was officially launched on January 12,
2016. It is a private equity investment
fund with the geographic focus on Latin
America and Caribbean area，and with
a mandate to promote the investment
activities in CELAC.
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20. Investment areas
08
New Energy
Information
Technology
Energy
Resources Agriculture
Production
Capacity
Cooperation
Infrastructure
Manufacturing
Industry
Medical
Care
Technology
Innovation
 Green field projects
(PPP, BOT, BT, BLT)
 Brown field projects
(M&A)
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21. 09
1. The balance of
strategic content
and economic
feasibility
3. Stable and sufficient
cash flow , less currency
exchange risk
2. Sustainable
Business model
Stable
politics
Good
investment
envir
4. Team！Team！
Projects screening principals
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